Find out dividend payout ratio

Question

Problem:

Dentaltech Inc. projects the following data for the coming year. If the firm follows the residual dividend model and also maintains its target capital structure, what will its dividend payout ratio be?

EBIT	$2,900,000	Capital budget	$600,000
Interest rate	10%	% Debt	40%
Debt outstanding	$5,300,000	% Equity	60%
Shares outstanding	5,000,000	Tax rate	40%

A) 74.7%

B) 68.0%

C) 79.2%

D) 59.0%

E) 66.5%

Note: Please show how you came up with the solution.